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March Alert - Topics include: 2013 Property Tax Assessment Notices and Appeals to the Board of Review; Partial Exemption for Spec Homes; and Court Supports Use of Bank Sales in Property Tax Case

March 8, 2013

2013 Property Tax Assessment Notices and Appeals to the Board of Review

Michigan Taxpayers have recently received, or soon will be receiving, their 2013 assessment notices. While owners of properties classified on the assessment roll as commercial and industrial real property do not have to protest their assessments to the local Board of Review in order to appeal to the Tax Tribunal, there are times when a March 2013 Board of Review appeal is still required to preserve Tax Tribunal appeal rights for the 2013 tax year. Required Board of Review appeal situations include:

  1. Valuation or exemption appeals for property classified as Residential, agricultural or developmental
     
  2. Personal property appeals if the taxpayer failed to file a personal property statement before the first day the Board of Review meets
     
  3. A challenge to a property’s classification

Filing a letter or fax sometimes satisfies the protest requirement, but taxpayers should immediately check with the local assessor’s office to verify the procedural and timing requirements in their jurisdiction.

Partial Exemption for Spec Homes

Michigan Public Act 494 of 2012 provides that for taxes levied after November 2012, certain residential property, defined as “development property,” will be exempted from local school operating taxes. "Development property" includes any residential dwelling (including a residential condominium) that has never been occupied; is available for sale; is not leased; and is not used for any business purpose. The exemption lasts for the shorter of three years or whenever the property no longer qualifies as development property. Owners of qualifying property may petition the local 2013 July Board of Review to apply for a refund of school operating taxes levied in December 2012 as part of a winter 2012 property tax bill.

Court Supports Use of Bank Sales in Property Tax Case

In Kassem Abbas v City of Dearborn, the Michigan Court of Appeals (in an unpublished decision) recently held that it was appropriate to consider bank-owned and short sales when determining value for property tax purposes. The taxpayer’s appraiser testified that he could not find a sufficient number of private sales that were comparable to the subject property and therefore included some bank-owned sales and short sales in his sales comparison approach valuation. The City claimed that the appraisal must be disregarded because bank-owned sales and short sales are by their nature “forced sales,” and Michigan’s property tax law prohibits the use of forced sales when determining true cash value. The Court held in this case that the taxpayer’s appraiser’s sales could be properly used to determine true cash value. This case acknowledges that, during recent years, bank-owned and short sales are often the best, or maybe the only, indicators of market value.

If you have any questions regarding any of these issues or any other in-state or out-of-state real estate tax appeals matters, please contact any of our tax professionals.